DAIICT: Business Finance 2014

Topic 1: Financial Statements 1

DAIICT:
Introduction
to Business
Finance
Topic 1:
Financial
Statements
CA Sandeep Shroff
DAIICT: INTRODUCTION TO BUSINESS FINANCE TOPIC 1: FINANCIAL STATEMENTS 1
Business as an
economic activity
Manufacturing
Trading
Servicing
Economic functions of
business
Wealth creation
Wealth management
Wealth distribution
2014 DAIICT: INTRODUCTION TO BUSINESS FINANCE TOPIC 1: FINANCIAL STATEMENTS 2
DAIICT: Business Finance 2014
Topic 1: Financial Statements 2
2014 DAIICT: INTRODUCTION TO BUSINESS FINANCE TOPIC 1: FINANCIAL STATEMENTS 3
Finance Operations
Marketing Human Resource
Management
2014 DAIICT: INTRODUCTION TO BUSINESS FINANCE TOPIC 1: FINANCIAL STATEMENTS 4
Idea
Generation
Strategic
Planning
Creating
Structure
Obtaining
Permissions
DAIICT: Business Finance 2014
Topic 1: Financial Statements 3
2014 DAIICT: INTRODUCTION TO BUSINESS FINANCE TOPIC 1: FINANCIAL STATEMENTS 5
Raise money
from financial
markets
Invest in LT/ST
assets
Operate
business using
assets
Generate cash
flows
Meet liabilities
and tax burden
Distribute
and/or reinvest
surplus
2014 DAIICT: INTRODUCTION TO BUSINESS FINANCE TOPIC 1: FINANCIAL STATEMENTS 6
Financing
Investing
Operating
Business
Activities
Journals
Ledgers
Trial Balance
Recording
Transactions
Profit and Loss
Statement
Balance Sheet
Cash Flow
Statement
Financial
Reporting
DAIICT: Business Finance 2014
Topic 1: Financial Statements 4
2014 DAIICT: INTRODUCTION TO BUSINESS FINANCE TOPIC 1: FINANCIAL STATEMENTS 7
Starting
financial
position
Change due
to
performance
Ending
financial
position
Reporting
vide financial
statements
Financial
statement
analysis
Economic
decisions by
users
The role of financial reporting by companies is to provide
information about their performance, financial position, and
changes in financial position that is useful to a wide range of users
in making economic decisions.
2014 DAIICT: INTRODUCTION TO BUSINESS FINANCE TOPIC 1: FINANCIAL STATEMENTS 8
Internal Stakeholders (Management Accounting)
Management and Owners, Employees
External Stakeholders (Financial Accounting)
Investors, Lenders, Suppliers, Customers
Government, Community
DAIICT: Business Finance 2014
Topic 1: Financial Statements 5
Position statement at a specific point in time
Assets = Liabilities + Equity
Assets = Economic resources of business
Liabilities = Economic obligations to outsiders
Equity = Residual interest of owners
2014 DAIICT: INTRODUCTION TO BUSINESS FINANCE TOPIC 1: FINANCIAL STATEMENTS 9
2014 DAIICT: INTRODUCTION TO BUSINESS FINANCE TOPIC 1: FINANCIAL STATEMENTS 10
Income
Revenue
Other income
Gains
Expenses
Operating
expenses
Other expenses
Losses
DAIICT: Business Finance 2014
Topic 1: Financial Statements 6
Operating CF
Investing CF
Financing CF
Incomes & expenses
Working capital
changes
Purchase of LT assets
Sale of LT assets
Raise/repay equity
and debt capital
Reward capital
2014 DAIICT: INTRODUCTION TO BUSINESS FINANCE TOPIC 1: FINANCIAL STATEMENTS 11
Chairman
Speech
Directors
Report
Management
Discussion &
Analysis
Corporate
Governance
Report
Auditors
Report
Notes to
Financial
Statements
2014 DAIICT: INTRODUCTION TO BUSINESS FINANCE TOPIC 1: FINANCIAL STATEMENTS 12